UBS, Standard Chartered plan Asian fund-distribution pact

ZURICH (MarketWatch) -- UBS AG (UBS) Friday underlined its determination to grow in Asia by saying it plans to form a strategic alliance with Standard Chartered Bank PLC (STAN.LN) for fund distribution in that region.

It also said it has agreed to buy the British bank's mutual funds management business in India for 147 million Swiss Francs, or $120 million.

Zurich-based UBS said it plans to form a strategic alliance with Standard Chartered Bank for fund distribution in Asia, the Middle East and Africa. The idea is to give Standard Chartered's growing retail and wealth management businesses access to the Swiss bank's asset management and certain investment banking products, and at the same time, provide momentum to UBS's third-party wholesale business in Asia. The scope of the agreement hasn't been finalized yet.

UBS is aiming to make a big push into the large and rapidly growing Asian markets, including China, Japan and India, and this puts UBS' foot in the door in India for other business as well, analysts said.

"The Indian market has about $150 billion of assets under management, plus economic growth of roughly 10%, which makes it an incredibly attractive market," Javier Lodeiro, Zurich-based analyst with German private bank Sal. Oppenheim, said. He rates the stock neutral with CHF82 target.

"The deal itself isn't very large, but the cooperation is a smart strategic move," Lodeiro said. UBS' private bank is waiting to be granted a license to operate in India.

UBS shares fell in pre-market indications. At 0750 GMT, UBS stock was indicated CHF0.50 lower, or 0.6%, at CHF77.55, with the broader Swiss market also set to decline when trading resumes at 0800 GMT.

UBS decided to expand in Asia in late 2004. Since then, the share of business generated in the region has risen from around 7% of the group's total to around 15%. Like many of its rivals, UBS has singled out China and India for expansion, citing strong economic growth rates there.

In a first move under the collaboration, UBS will buy Standard Chartered Asset Management Company Private Ltd, as well as Standard Chartered Trustee Company Private Ltd, the manager and trustee, respectively, of the mutual funds offered by the bank. The transaction remains subject to regulatory approval as well as to a price adjustment linked to assets under management at closing.

"The acquisition is a milestone in our plan to build a major presence in India's growing funds management industry and demonstrates UBS's broader commitment to this important market," said John Fraser, the head of UBS' global asset management.

UBS expects Standard Chartered's mutual funds management business in India to have assets under management of around CHF4 billion, which is spread across 16 mutual funds.

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